Despite a 10% increase in turnover, profits before tax fell a massive £400,000 in the first half of the H&H Group financial year.

The interim results for the Group which owns Borderway Mart, Carlisle, along with several other markets, show unaudited EBITDA (Earnings before interest, tax, depreciation and amortisation) amounted to £1.5m for the six months to December 31, 2022. This resulted in a profit before tax of £0.9m against £1.3m for the corresponding period in 2021.Turnover increased by more than 10% from £8.5m to £9.4m.

Group chairman, Michael Scott, blamed the situation on conditions outwith their control.

“I would like to congratulate every member of the whole team for achieving such a positive performance in conditions so far beyond our experience or control," he said.

"In the face of historically high cost inflation we have grown the Group’s turnover by more than 10%, and limited the downturn in our profits to a similar level.

“I cannot stress enough how unprecedented the increase in costs has been, not just in the headline rises in energy prices, but also in fundamental aspects of our financial management such as interest rates. The scale and impact of these cost rises is starkly highlighted by the contrast between our growth in turnover and dip in profit margin, and the Group has risen to the challenge of adapting to these conditions to safeguard our performance in the second half the year."

He added that after an exceptional half-year in last year’s results, the Group’s livestock marketing sector, Harrison & Hetherington had been unable to replicate the same financial performance. Volumes had grown, he said, but some stock values had fallen with the exceptional dry summer being a major detrimental factor on the autumn sales. In addition to this, costs had been higher than budgeted predictions.

In contrast, H&H Insurance Brokers and H&H Land & Estates managed to hit or exceed their first six months’ budget to December 31, 2022.

Last year, H&H Insurance Brokers acquired Tynedale Insurance Services, which coupled with geographical expansion, new products and services, innovation in general insurance, saw the division land the UK’s Independent Insurance Broker of the Year at the 2022 Insurance Times Awards.

H&H Land & Estates has had a positive start to the year with several farms and blocks of land brought forward for sale, the most notable, a block of Cumbrian land selling for £20,000 per acre.

Share prices have as a result of profits, slipped from £21.25 per share in the same period last year, to £20.24. This tracks against the increase in net assets of the Group, which have increased to £23.5m from £22.5m at the same point last year.

“The Board is mindful of the increased costs facing all aspects of our businesses, over and above that anticipated, for example interest costs which have doubled in recent months.

With no sign of any change to this situation before our year end but acknowledging the need to recognise our shareholders, the board is pleased to recommend an interim dividend of 5p per share. However, to act responsibly and remain prudent, payment of this will be deferred to protect the Group’s cash flow in these uncertain times.

“We serve a predominantly rural business base profoundly affected not only by the same economic pressures we face, but also by changes in Government policy that threaten their future viability. So our services and support have never been more important, and we will adapt our businesses to be fit for a successful future at the same time as we are helping our customers to secure a sustainable future for theirs,” concluded Mr Scott.